What impact will IR35 have on your FP&A projects?
IR35 changes experienced in the public sector are now scheduled to be implemented across the private sector commencing April 2020. This will have an impact on all Personal Service Companies PSC’s falling into the categories of Limited Company and Limited Liability Company or Partnership who currently determine the level of NIC and Tax due to HMRC usually via their associated accountants.
All tax liability has now been transferred onto the beneficiary or end user of any contractor service, to facilitate the collection of money by HMRC. Medium and large-sized engagers of contractors will be responsible for determining contractors’ IR35 status and for providing their decision, along with reasons, in a Status Determination Statement. This decision needs to be shared with both the worker and agency that the end-client engages with in the supply chain.
HMRC’s CEST (Check Employment Status for Tax) tool aims to assist contractors, hirers and agencies in determining whether IR35 applies to a particular engagement. However, this tool is flawed and many contractors are incorrectly deemed within IR35 when in fact employment specialists can show them as outside the legislation.
Inclusion within IR35 falls into the following categories:
- Right of Substitution
- Supervision, Direction and Control
- Mutuality of Obligation
- Financial Risk
If you use a contractor resource to develop and maintain IBM® TM1 / Planning Analytics software, these new developments in IR35 could affect your ability to deliver. HMRC’s changes to IR35 will reduce contractors’ take-home pay and potentially increase the cost of operating for your business.
Our eBook further explains the changes and how they will impact on both contractors and employers and shows how using Spitfire Analytics will help you mitigate risk of any repercussions arising from the changes to the IR35 legislation.